Citation Nr: 1518959 Decision Date: 05/04/15 Archive Date: 05/13/15 DOCKET NO. 10-42 545 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUE Entitlement to waiver of recovery of an overpayment of improved pension benefits in the calculated amount of $9,119.83. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD K. Hudson, Counsel INTRODUCTION The Veteran served on active duty from February 1965 to June 1965. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a regional office (RO) decision of the Philadelphia, Pennsylvania, Committee on Waivers and Compromises (COWC) dated in March 2010, which denied waiver of recovery of the overpayment. Jurisdiction of the Veteran's claims file continues to reside with the St. Petersburg, Florida, RO. FINDINGS OF FACT 1. From May 6, 2008, through February 24, 2009, the Veteran received VA pension benefits to which he was not entitled, due to his incarceration in a state prison following conviction of a felony or misdemeanor, resulting in the creation of an overpayment of $9,119.83. 2. The Veteran was significantly at fault in the creation of the overpayment, in failing to notify VA of his incarceration, despite actual knowledge, due to a prior incarceration from 2003 to 2006, that an overpayment would be created by his retaining benefits throughout his incarceration; his fault outweighs VA's fault in delaying action on the notice received from the prison match indicating his incarceration. 3. Although some hardship may result from recoupment of the overpayment, he was unjustly enriched by the amount of the overpayment; recovery of the debt would not defeat the purpose for which VA pension benefits are authorized; the appellant did not detrimentally rely on the erroneous payments, and it has not been otherwise shown to be inequitable to require repayment of the debt. CONCLUSION OF LAW Waiver of recovery of an overpayment of improved pension benefits in the amount of $9,119.83 would not be against equity and good conscience. 38 U.S.C.A. § 5302 (West 2014); 38 C.F.R. §§ 1.963, 1.965 (2014). REASONS AND BASES FOR FINDINGS AND CONCLUSION Notification and Assistance The notice and duty to assist provisions of the Veterans Claims Assistance Act of 2000 (see 38 U.S.C.A. §§ 5103, 5103A) do not apply to waiver claims. Barger v. Principi, 16 Vet. App. 132 (2002). Nevertheless, the RO has explained to the veteran the bases for denial of the claim, and afforded him the opportunity to present information and evidence in support of the claim. Before his benefits were retroactively terminated he was told that the proposed termination was based on his failure to report his incarceration, and he was told to submit information if this information was wrong. In addition, during a previous incarceration from 2003 to 2006, he had been charged with an overpayment due to his retention of benefits while incarcerated; thus, he had actual knowledge of the consequences of retaining benefits while incarcerated. The statement of the case informed him of the regulatory equity and good conscience elements. Moreover, the appellant has not identified any deficiency in notice which would compromise a fair adjudication of the claim. Shinseki v. Sanders, 129 S. Ct. 1696, 1705-06 (2009) (in general, party claiming error bears burden of showing that prejudice resulted). He has been afforded a meaningful opportunity to participate effectively in the processing of his claim. No prejudicial notice error has been shown. Waiver of Overpayment The Veteran began receiving VA pension benefits in 2000. A prison match in July 2008 disclosed that the Veteran was incarcerated in a state prison on March 13, 2008, due to conviction of a felony or misdemeanor. In this regard, VA pension benefits must be discontinued effective the 61st day of incarceration in a Federal, State or local penal institution following conviction for a felony or misdemeanor. 38 C.F.R. § 3.666 (2014). In July 2009, VA contacted the prison, verified his incarceration in March 2008, and learned that the Veteran had been released on February 25, 2009. In July 2009, the Veteran was informed that VA had received information regarding his incarceration, and that VA proposed to terminate his pension benefits effective from May 6, 2008, to February 25, 2009. No response was received, and the proposed action was taken in November 2009, resulting in an overpayment in the amount of $9,119.83. The Veteran has not disputed the creation of the overpayment, i.e., he has not claimed that he was not imprisoned for the stated period of time, or otherwise argued that the debt was not valid. Turning to the matter of waiver of recovery of the overpayment, there is no indication of fraud, misrepresentation, or bad faith on the part of the appellant in the creation of the overpayment. In such circumstances, recovery of an overpayment shall be waived where recovery of the overpayment would be against equity and good conscience. 38 C.F.R. §§ 1.962, 1.963(a). The standard "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government's rights. 38 C.F.R. § 1.965(a). The decision reached should not be unduly favorable or adverse to either side. Id. The phrase equity and good conscience means arriving at a fair decision between the obligor and the Government. Id. In making this determination, the facts and circumstances in a particular case must be weighed carefully. In applying the "equity and good conscience" standard to a case, the factors to be considered by the adjudicator are: (1) whether actions of the debtor contributed to the creation of the debt, (2) weighing the fault of the debtor against any fault attributable to VA; (3) financial hardship, i.e., whether collection would deprive the debtor or the debtor's family of basic necessities, (4) whether recovery of the debt would nullify the objective for which benefits were intended, (5) unjust enrichment, i.e., whether failure to make restitution would result in unfair gain to the debtor, and (6) whether the debtor has changed position to his detriment due to his reliance upon the receipt of VA benefits. 38 C.F.R. § 1.965(a). Moreover, all listed elements of equity and good conscience must be considered in a waiver decision. See Ridings v. Brown, 6 Vet.App. 544 (1994). With respect to whether actions of the debtor contributed to the creation of the debt, the Veteran failed to notify VA of his incarceration, despite having actual knowledge, due to a prior incarceration, of the requirement that he do so, as well as the consequences of failing to notify VA of his incarceration; this failure to act led directly to the overpayment. VA also bears some fault in the creation of the overpayment. In this regard, the prison match was noted to have been run in July 2008, and the report was received at the PMC in October 2008, yet no action was taken on the information until July 2009. Had VA taken action earlier, the overpayment would have been reduced. In balancing these faults, the Board places significant weight on the fact that the Veteran himself never notified VA of the incarceration; VA only learned of it through a prison matching program. Thus, the Board finds that the Veteran's fault outweighs fault on the part of VA. As to financial hardship, two financial status reports were received from the Veteran, one received in June 2010, and one in March 2011, which are identical. He reported that his only source of income was VA pension in the reduced amount of $731 per month, due to VA's recoupment of the overpayment. His monthly expenses totalled $875, consisting of rent of $600, food of $200, and other expenses, identified as bus and clothing, of $75 per month. This resulted in a monthly deficit of $144. These expenses are not excessive, and the Board finds that some hardship may result from recoupment of the overpayment. However, equity and good conscience means arriving at a fair decision between the beneficiary and VA, and involves balancing various factors between these two entities. See 38 C.F.R. § 1.965. Thus, this element must be considered in light of the other elements of equity and good conscience. Of particular importance is the element of unjust enrichment. The Veteran claims that he was not unjustly enriched, but "unjust enrichment" does not mean he was made wealthy; the term means that failure to make restitution (i.e., to pay it back) would result unfair gain to the Veteran. 38 C.F.R. § 1.965(a)(5). He received $9,119.83, to which he was not entitled; thus, he was "unjustly enriched" by this quantifiable amount, which he apparently spent, as he did not list the amount as an asset. It has not been shown that recovery of the overpayment would defeat the purpose of VA pension benefits, which is to provide low-income wartime veterans with a minimum level of income. In this regard, VA is recouping the overpayment in installments, leaving the Veteran with approximately 3/4 of his pension payments, until the debt is recouped. The Veteran has not claimed to have relinquished any valuable right or to have changed his position by reason of having relied on the additional erroneous benefits. No other factors which would preclude recovery of the overpayment as against equity and good conscience have been put forth. Thus, taken as a whole, there are no equitable factors which counteract the Veteran's fault in the creation of the debt, and the unjust enrichment resulting from the veteran's receipt of $9,119.83, to which he was not entitled. After weighing all of the above factors, the Board believes that recovery of the overpayment would not be against equity and good conscience. 38 U.S.C.A. § 5302. Thus, the request for waiver of recovery of the debt is denied. The evidence is not so evenly balanced as to create a reasonable doubt, and, hence, the benefit-of-the-doubt doctrine is inapplicable. 38 U.S.C. § 5107(b); see Ortiz v. Principi, 274 F.3d 1361 (Fed. Cir. 2001); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). ORDER Waiver of recovery of the overpayment of VA pension benefits in the amount of $9,119.83, is denied. ______________________________________________ MICHAEL A. HERMAN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs